Global trade costs rising, not as high as pandemic levels

ABC NEWS (Australia)

Freight costs are rising due to global conflicts and extreme weather it's not as difficult as during the early period of the COVID pandemic, but consumers can expect higher costs and longer waits as supply chain issues begin to mount.

Transcript

00:00 You talked about extreme weather. You would have seen the flooding at Dubai Airport, one

00:05 of the world's big trade hubs. One of the things that's probably been a bit off the

00:09 radar is there's been drought in the Panama Canal. And what that means is that what can

00:14 normally take 35 ships through every day has trimmed down to about 20. So ships are having

00:19 to either pay more to jump the queue and get forward or go further around. We're seeing

00:24 similar things with global conflicts where ships are having to take much longer routes

00:29 to avoid areas of conflict like Ukraine, the Middle East, but also rebels in the Red Sea.

00:35 I spoke to Paul Zolai, who is the head of the Freight Trade Alliance in Australia, about

00:40 some of the difficulties of just moving stuff around at the moment.

00:43 Well, we've got significant difficulties now around the world, whether it's the geopolitical

00:49 tensions, whether it's weather conditions that are quite extreme. We saw what has happened

00:54 in Dubai recently affecting aircrafts there and a whole range of issues, including wars

01:02 and the like. So it's very difficult times, but none of it as difficult as what we experienced

01:07 through COVID.

01:08 Dan, is global trade going backwards?

01:11 It did last year. It went backwards about 1% last year in volume, but interestingly,

01:17 about 5% in value. And what that means is that food and absolutely vital stuffs were

01:23 still being pushed around the world, but those higher value items weren't moving as much

01:27 because the cost of living crisis was trimming people's ability to buy things. Now, the World

01:33 Trade Organisation expects trade to pick up about 2.5% this year and more than 3% the

01:38 next as it kind of powers on through. But talking to people like port operators, people

01:43 who move things around the world, they say at the moment things are quite flat. We certainly

01:47 don't have the same issues as we did during COVID when lots of the workforce were taken

01:52 out. And also when air freight was essentially stopped. More than 80% of the air freight

01:57 in Australia actually comes in the belly of passenger aircraft. So when that trade ended,

02:02 so did our ability to get things in. So not as bad as then, but certainly some issues

02:06 remaining.

02:07 So what does all this mean for consumers?

02:10 More cost. It's really simple. So take the Huti rebels in the Red Sea. Ships are now

02:16 taking essentially a two week detour. That adds costs. Things getting from Europe and

02:21 Mediterranean to the UK and then to Australia are taking about two weeks more. So if you

02:26 want things faster, you have to pay more to get them air freighted or even shipping, even

02:31 things going on these really massive boats around the world are paying more for fuel,

02:36 more for insurance, and that gets all passed on to consumers.

02:38 [BLANK_AUDIO]

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